Mandela, Mbeki Linked in Arms Deal Report [Sunday Tribune, 2004-10-17]

Publication: Sunday Tribune Issued: Date: 2004-10-17 Reporter: Jeremy Gordin

Mandela, Mbeki Linked in Arms Deal Report

Publication	Sunday Tribune
Date	2004-10-17
Reporter	Jeremy Gordin
Web Link	www.sundaytribune.co.za

Former president Nelson Mandela and Thabo Mbeki, his then-deputy, allegedly knew far more about the behind-the-scenes shenanigans in the build-up to the arms deal.

They allegedly knew a great deal more than either man has previously stated about the negotiations and to-ings and fro-ings underlying the arms deal as well as some of the actions taken by Durban businessman Schabir Shaik.

Shaik and 11 of his companies are on trial in the Durban High Court on charges of corruption and fraud. This includes the charge that Shaik asked for a bribe of R500 000 a year for two years, for Deputy President Jacob Zuma, from arms dealer Thomson (later called Thint).

The bribe was allegedly in exchange for Zuma's clout and "protection" against arms deal investigations that, at that time, had started to loom.

According to the "secret" forensic investigation into Shaik and his companies, undertaken by KPMG on behalf of the National Prosecuting Authority, Mandela and Mbeki were allegedly aware of many of the complex lobbying efforts that Shaik is claimed to have initiated during 1997 to 1999.

The extent of the involvement of Mandela and Mbeki is just one of the allegations in the Shaik matter that has not been revealed before.

These allegations are contained in the so-called "secret", 260-page, KPMG The State versus Schabir Shaik and others: Forensic Investigation (Draft Report on Our Factual Findings), dated April 28, 2004.

The report says: "It is apparent that there was involvement at a high political level by Mbeki and Mandela to assist and advise on the eventual structuring of the shareholding in African Defence Systems (ADS)" and that "Mandela and Mbeki were involved in negotiations and discussions during the period leading to the day *1 when the cabinet approved the list of bidders for supply in the Arms Deal."

In the conclusions of the section dealing with Shaik's arms deal project, the report says: . . . it appears that the involvement (of Mandela and Mbeki) was limited to . . . resolving disputes regarding the black empowerment partner component .*2 . . ".

According to the report, Shaik had wanted to ensure, first, that the consortium with which he was involved would be a preferred bidder in the arms deal. Later, he wanted to make certain that his company, Nkobi Holdings, after it was sidelined in September 1999 owing to French-owned Thomson taking full ownership of ADS, would be the acceptable "black empowerment" partner in the
consortium.

The Thomson group and ADS, two arms manufacturing companies, had bid as partners - ADS was the local manufacturing company - for a contract to make combat suites (electronic command and control systems) for corvettes naval vessels that were part of the government's Strategic Defence Procurement Packages. They thus formed part of the German Frigate Consortium (GFC).

The KPMG report was prepared for the National Prosecuting Authority and is confidential.

Judging from the indictment against Shaik, the state's "summary of substantial facts", and from certain graphics already introduced in court, the report forms the substance of most of the state's case against Shaik.

However, Billy Downer SC, the state prosecutor, has not yet introduced the document in court as an exhibit and it is not known whether he will introduce the information about Mbeki and Mandela.

Making an appearance in the report, in connection with Shaik and Thomson's manoeuvring to be a preferred bidder, is someone referred
to as the "tailor" ("tailleur") by the Frenchmen in Thomson.

From the report this person appears to have been Yussuf Surtee, a businessman involved in the clothing trade, with close connections to Mandela.

Tailor's pal

Mac Maharaj, former transport minister, is, according to the report, referred to by the French as the "tailor's pal".

The report alleges that in September 1997 Pierre Moynot of Thomson mentioned to his office in France "that Surtee did, in fact, appear closer to Mandela than what his previous fax suggested".

The report alleges that in November 1997 Moynot again wrote to his colleagues in an encrypted fax. Moynot is alleged to have written that the "tailleur" had repeated that he had obtained assurance from the then-deputy president that Thomson would be awarded the combat system and the "sensors".

The report continues: "The deputy president of South Africa at the time was Mbeki, who would also have been the chair of the ministers committee that eventually took the final decision and made the final recommendation to the cabinet."

In June 1998, the report alleges, information was received by Thomson from a French ministry (it is not clear which one) that Mbeki was ill-disposed towards Thomson in South Africa because he was in dispute with Zuma and Shaik over which new black empowerment partners should be included in ADS - he was allegedly not keen on Shaik's group - and because Mbeki was not friendly with "the tailor".

According to the report, the French secret service was also involved in aspects of the arms deal.

A note, translated from the French and dated April 3, 1998, is headlined, "Unkind remarks to Thomson" and indicates that "the French Secret Service had given information to the authorities (it is not clear whether these were the South African or French ones) that Thomson "was dealing" with the "tailor".

A second heading on the same note is "Visit to the bank" and it reads that an appointment had been set with Mandela for April 26, 1998, but that an appointment with Mbeki and Joe Modise, former minister of defence, would have to be requested in writing.

The total cost of the full acquisitions programme, announced in May 1996, was projected to be R29.9 billion, of which the corvette programme, one of six, was worth about R6 billion.

The other five programmes were submarines, light utility helicopters, maritime helicopters, fighter trainers and advanced, light fighter aircraft.

With acknowledgment to Jeremy Gordin and Sunday Tribune

*1 Reality Strikes

The day when the cabinet approved the list of bidders for supply in the Arms Deal was 17 November 1998.
The day when the government signed the contracts for supply in the Arms Deal was 3 December 1999.
The day when the Chairman of the Ministers Committee for supply in the Arms Deal (MINCOM) met secretly with three of the most senior executives of Thomson International to discuss supply of the Corvette Combat Suite was 17 December 1998.
The Chairman of MINCOM had already met secretly with senior executives of Thomson International to discuss supply of the Corvette Combat Suite during June 1998.
The Chairman of MINCOM again met secretly with senior executives of Thomson International to discuss supply of the Corvette Combat Suite during the period January to April 1999.

*2 This chronology ups the ante to a level far greater than merely being "limited to . . . resolving disputes regarding the black empowerment partner component."

It is simply unlawful as the primary law of the Republic *3 requires that all government acquisition processes are "in accordance with a system which is fair, equitable, transparent, competitive and cost-effective *4".

*3 The Constitution Act of 1996, Section 217.

*4 The acquisition of the Corvette Combat Suite from Thomson-CSF could not possibly be :

transparent if the Chairman of MINCOM had one or more meetings with the supplier during the bidding process
competitive if the Chairman of MINCOM had already guaranteed the contract to the supplier (which he did)
cost-effective if the supplier charged a price of R2,599 billion when negotiations had already secured a price of R2,2 billion and which was still considered too high because a comprehensive cost and risk audit had shown a price of R1,9 billion to be a fair target price
fair if the supplier had the government over a barrel during the negotiation process because of the behind-the-scenes shenanigans by the most senior members of government and their stooges like the Chief of Acquisitions, brother of the supplier's "black" economic empowerment partner and now a convicted criminal

This is why the Chairman of MINCOM "honestly" cannot remember the meeting with three of the most senior executives of Thomson International on 17 December 1998.

There might be some among us who might actually be able to supply a documented scope of some of these discussion - to wit.

It might be time to convict some more criminals.